Equity release schemes can be considered a blessing for individuals in their retirement. Like any other scheme, it is important that you consider certain factors before arriving at a decision. Given are some important factors to take into account:
Bear in mind that all equity release schemes are regulated and monitored by the Financial Services Authority (FSA). Additionally, all equity release advisers must themselves be authorised by the Financial Services Authority. The adviser must have passed the industry equity release examinations by the relevant body; be it Chartered Insurance Institute (CII) or the Personal Finance Society (PFS).
A trade body set up within the industry to provide self regulation is SHIP (Safe Home Income Plans). To become a member of SHIP the equity release company must have certain features within the plan features.
These include: -
- A no negative equity guarantee
- The ability to repay the scheme at any time (however it can be subject to early repayment charges)
- The freedom to move property & transfer the scheme at the same time
Non negative equity guarantee
The feature is included at no extra cost & ensures that the equity release plan has added protection for the plan holder. The guarantee ensures that the debt never exceeds the overall value of the property. Moreover, any of your outstanding debt will not be transferred to your next of kin after the sale of the property. This provides peace of mind in that no debt can be levied on your beneficiaries.
Moving to a new property
All lenders whom are SHIP members must allow you to change your residence after taking out an equity release plan. Therefore, contact Equity Release Supermarket to ensure any recommended lender meets this criteria.
You may have to take out a joint equity release plan if you are living with your partner. This decision will depend on which lender you intend to proceed to application with. If the house is in the sole name of a couple, & they are married, then lenders such as Aviva & LV= will insist that the application & the property is put into joint names. This would involve additional costs at the land registry. However, Just Retirement won’t insist on this basis of application as they will accept the party excluded on the deeds to remain so & merely sign a waiver of occupancy form. This will state that if the person on the deeds died, then they would waive their rights behind that of the equity release. This would ensure the the lender received their funds from the sale of the property within an allotted timescale.
The debt will only be reclaimed only after the death of you both or both moving into long term care. At this point the executors of the estate will be responsible for selling the property & the repayment of the equity release scheme.
There may be various charges involved in setting up equity release schemes. Some of the costs are as follows: -
- Legal fees
- Fees for the building survey
- Fees for redemption of any existing loan
- Advice fee
It is recommended that you find out any hidden costs before taking a decision. Consider these given points and arrive at a decision accordingly. There can be a large difference between one equity release adviser & another.
For instance, Equity Release Supermarket’s advice fee is a flat £595. You can be sold exactly the same plan by certain larger equity release brokerage’s who charge over £795 & even charge for the administration between themselves & the solicitor.
Always shop around & look out for any hidden fees such as these which can make the whole process much more expensive.
For a detailed breakdown of Equity Release Supermarket’s charges & how much you can save in charges, please contact Mark on 0800 678 5159 or email firstname.lastname@example.org.